Pensions regulator launches consultation on investment governance

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Pension scheme trustees and advisers are being given the chance to have their say on new rules for investment governance.

The Pensions Regulator (TPR) has launched a consultation seeking the industry’s views on the tougher rules. The new rules mean trustees will be legally required to run competitive tender processes to recruit fiduciary managers, if their schemes use such arrangements for at least 20% of their funds. This requirement will also apply to ‘existing arrangements that have not been made as a result of competitive tender’.

Trustees will also be required to set strategic objectives for those providing them with investment advice. Separately, fiduciary managers and investment consultants will have new duties placed on them in regard to reporting charges, fees and performance. The changes follow an investigation by the Competition and Markets Authority (CMA) into the investment consultancy market.

Commenting on the matter, David Fairs, Executive Director for Regulatory Policy, Analysis and Advice at the TPR, said: ‘Investment consultants and fiduciary managers can play an important role in helping trustees manage scheme investments effectively to get the best possible outcomes for savers.

‘The CMA report found that when trustees tendered for services and reviewed the performance of their investment advisers, they were more likely to receive a better-quality service and better value for money. This is the chance for trustees and other parts of the industry to have their say on the guidance we have drafted to support the new rules.’

The consultation closes at midday on 11 September 2019.